SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant /x/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/x / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to <section> 240.14a-11(c) or
<section> 240.14a-12
HOME PROPERTIES OF NEW YORK, INC.
(Name of Registrant as Specified in Its Charter)
HOME PROPERTIES OF NEW YORK, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/x/ No Fee Required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-
11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
4) Proposed maximum aggregate value of transaction:
* Set forth the amount on which the filing fee is calculated and state how
it was determined.
/ / Fee paid previously with Preliminary materials:
___________________________________________________________________
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form Schedule or Registration Statement No.:
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4) Date Filed:
HOME PROPERTIES OF NEW YORK, INC.
Suite 850
Clinton Square
Rochester, New York 14604
March 25, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Home Properties of New York, Inc. The Annual Meeting will be held on
Tuesday, May 6, 1997 at 2:00 p.m. at The Strong Museum, One Manhattan
Square, Rochester, New York 14607.
A Notice of Annual Meeting and a Proxy Statement are enclosed. They
describe the matters to be acted upon at the Annual Meeting. Your vote on
these matters is very important. Please sign, date and return the enclosed
proxy card in the envelope provided. This will insure that your shares are
represented at the meeting, whether or not you plan to attend in person.
We look forward to seeing you at the meeting.
Norman P. Leenhouts
CHAIRMAN AND CO-CHIEF EXECUTIVE OFFICER
Nelson B. Leenhouts
PRESIDENT AND CO-CHIEF EXECUTIVE OFFICER
HOME PROPERTIES OF NEW YORK, INC.
Suite 850
Clinton Square
Rochester, New York 14604
_______________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 6, 1997
_______________________________________
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders of
Home Properties of New York, Inc. (the "Company") will be held on Tuesday,
May 6, 1997 at 2:00 p.m. at The Strong Museum, One Manhattan Square, Rochester,
New York 14607 for the following purposes:
1. To elect eleven directors of the Company to serve until the
1998 Annual Meeting of Stockholders and until their respective
successors are elected ;
2. To ratify the Board of Director's appointment of Coopers &
Lybrand as the Company's independent auditors for 1997;
3. To consider the approval of certain amendments to the Company's
Stock Benefit Plan, including increasing the number of authorized shares
of Common Stock for options to independent directors;
4. To consider the approval, pursuant to the rules of the New York
Stock Exchange, of the issuance of up to 5,000,000 additional shares of
the Company's Common Stock from time to time in one or more privately
negotiated transactions or public offerings; and
5. To consider and act upon any other matters that are
properly brought before the Annual Meeting and at any adjournments or
postponements thereof.
The Board of Directors set the close of business on March 25, 1997 as
the record date. Only stockholders whose names appear on the stock register of
the Company at the close of business on the record date will be entitled to
notice of and to vote at the Annual Meeting and at any adjournments or
postponements. (If you hold your stock in the name of a brokerage firm, bank or
other nominee, only that entity can vote your shares. Please give instructions
for your shares to be voted to the person responsible for your account.)
Please complete and sign the enclosed proxy card. The proxy
represented by this card is solicited by the Board of Directors of the Company.
Please mail the card promptly in the enclosed postage-prepaid envelope. You
may change the votes on any proxy by sending a written notice to Ann M.
McCormick, Secretary of the Company at 850 Clinton Square, Rochester, New York
14604 before the Annual Meeting, by sending a different proxy card with a later
date before the Annual Meeting or by voting in person by ballot at the Annual
Meeting. Stockholders of record who attend the Annual Meeting may vote in
person, even if they have previously delivered a signed proxy.
Rochester, New York By Order of the Board of Directors
March 25, 1997
Ann M. McCormick
Secretary
EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND
PROMPTLY RETURN THE ENCLOSED PROXY CARD. IF YOU ATTEND THE ANNUAL MEETING, YOU
MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY
CARD.
PRELIMINARY PROXY STATEMENT
HOME PROPERTIES OF NEW YORK, INC.
Suite 850
Clinton Square
Rochester, New York 14604
_______________________________________
PROXY STATEMENT
_______________________________________
FOR 1997 ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 6, 1997
March 25, 1997
This Proxy Statement is delivered to you in connection with the
solicitation of proxies by the Board of Directors of Home Properties of New
York, Inc. (the "Company") for use at the 1997 Annual Meeting of Stockholders
of the Company, (the "Annual Meeting"). The Annual Meeting will be held on
Tuesday, May 6, 1997 at 2:00 p.m. at The Strong Museum, One Manhattan Square,
Rochester, New York 14607.
This Proxy Statement is first being sent to stockholders on or about
March 25, 1997. The Board of Directors set the close of business on March 25,
1997 as the record date for determining which stockholders are entitled to
notice of and to vote at the Annual Meeting (including any adjournments or
postponements). Only holders of the Company's Common Stock ("Common Stock")
whose names appear on the stock registers of the Company at the close of
business on the record date will be entitled to notice of and to vote at the
Annual Meeting. As of the Record Date, there were 6,936,391 shares
of Common Stock outstanding and entitled to vote at the Annual Meeting.
Shareholder are entitled to one vote for each share of Common Stock they hold.
Please complete, sign, date and promptly return the accompanying Proxy
Card. An envelope with prepaid postage is enclosed. The persons named on the
Proxy Card will vote the shares of Common Stock as directed on properly
executed cards if they are received before the vote at the Annual Meeting and
not revoked. If a proxy is submitted without any instructions, the proxy will
be voted FOR Proposal 1 for the election of the eleven nominees for directors
of the Company named in this Proxy Statement; FOR Proposal 2 to ratify the
appointment of Coopers & Lybrand as independent auditors; FOR Proposal 3
regarding the changes to the Stock Benefit Plan; and FOR Proposal 4 regarding
the issuance of up to 5,000,000 shares of the Company's Common Stock from time
to time in one or more privately negotiated transactions or public offerings.
The Company does not expect any matters which are not described in this Proxy
Statement to be presented at the Annual Meeting. If other matters are
presented, proxies will be voted in accordance with the discretion of the proxy
holders.
For the Company to be able to act on the listed matters at the Annual
Meeting, at least a majority of the total number of outstanding shares of
Common Stock entitled to vote must be present, either in person or by proxy.
Under Maryland law, if a stockholder abstains on a vote, the abstention does
not constitute a vote "for" or "against" a matter. Thus, abstentions are
disregarded in determining the "votes cast" for purposes of electing directors.
With respect to certain matters, brokers and certain other nominees are
entitled to vote in their discretion if the beneficial owner or person entitled
to vote does not give the broker or nominee instructions on how to vote. If,
however, the brokers or nominees do not receive instructions from the
beneficial owner or other person entitled to vote such shares on Proposal 3
regarding the changes to the Stock Benefit Plan and on Proposal 4 regarding
issuing shares in private placements or public offerings, they may not vote on
those proposals and their "non-votes" will be treated like abstentions. Under
the rules of the New York Stock
Exchange, Proposals 3 and 4 must be approved by
a majority of the votes cast so long as the total of votes cast on the proposal
is more than 50% of the total number of shares entitled to vote.
A stockholder of record who submits a proxy may revoke it at any time
before the vote at the Annual Meeting: (i) by giving a written revocation to
Ann M. McCormick, the Secretary of the Company, at 850
Clinton Square, Rochester, New York 14604; (ii) by filing another properly
executed proxy with a later date; or (iii) by attending the Annual Meeting in
person and voting by ballot. Any stockholder of record as of the Record Date
who attends the Annual Meeting may vote in person even if he has previously
sent in a proxy card. If a stockholder attends the Annual Meeting but does not
complete a ballot his shares of Common Stock will be voted in accordance with
his previously given proxy.
The Company is mailing its 1997 Annual Report to Stockholders, including
its financial statements for the fiscal year ended December 31, 1996, at the
same time this Proxy Statement is being mailed to stockholders. Portions of the
Annual Report are incorporated in this Proxy Statement by reference. A
stockholder may also obtain a copy of the Company's Form 10-K Annual Report
filed with the Securities and Exchange Commission by writing Home Properties
of New York, Inc., Stockholder Services, 850 Clinton Square, Rochester, New
York 14604.
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, eleven individuals will be elected to serve as
directors until the 1998 Annual Meeting and until their successors are
elected. The Board of Directors has nominated Norman P. Leenhouts, Nelson B.
Leenhouts, Richard J. Crossed, Amy L. Tait, Burton S. August, Sr., William
Balderston, III, Alan L. Gosule, Leonard F. Helbig, III, Roger W. Kober,
Clifford W. Smith, Jr., and Paul L. Smith to serve as directors (the
"Nominees"). Each of the Nominees is currently serving as a director of the
Company. The Board of Directors anticipates that each of the Nominees will
serve as a director if elected. If any person nominated by the Board of
Directors is unable to accept election, the proxies will be voted for the
election of another person recommended by the Board of Directors.
As of December 30, 1996, the Board of Directors increased the number of
its members from ten to eleven and elected Alan L. Gosule, as provide by the
terms of the agreements entered into by the Company and Home Properties of New
York, L.P. (the "Operating Partnership") in connection with the investment by
the State Treasurer of the State of Michigan on behalf of certain of its
retirement funds of $35 million in Class A limited partnership interest in the
Operating Partnership. The right of the State Treasurer to nominate a director
of the Company (or more than one, up to four, in the event of breaches of
certain obligations of the Company or the Operating Partnership under the
agreements) continues until the value of the investment falls below $35 million
or 8% of the Company's equity capitalization for 30 consecutive days.
The favorable vote of the holders of a majority of the shares of Common
Stock cast at the Annual Meeting is required for the election of the nominees
as directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES.
INFORMATION REGARDING NOMINEES FOR DIRECTOR
Brief biographical descriptions of the Nominees follow. The information
was furnished to the Company by the Nominees. The information is up to date
through March 15, 1997.
-2-
Norman P. Leenhouts, 61, has served as Chairman of the Board of
Directors, Co-Chief Executive Officer and a director of the Company since its
inception in 1993. He has also served as Chairman of the Board of Home
Properties Management, Inc. ("HP Management") and as a director of Conifer
Realty Corporation ("Conifer Realty") since their formation. Norman Leenhouts
is a co-owner, together with Nelson Leenhouts, of Home Leasing Corporation, the
Company's predecessor ("Home Leasing"), and served as Chairman of Home Leasing
since 1971. He is a director of Hauser Corporation and Rochester Downtown
Development Corporation. He also serves as Chairman of the Board of
Trustees of Roberts Wesleyan
College and as a trustee of the University of Rochester. His is a
graduate of the University of Rochester and is a certified public accountant.
He is the twin brother of Nelson Leenhouts.
Nelson B. Leenhouts, 61, has served as President, co-Chief Executive
Officer and a director of the Company since its inception in 1993. He has also
served as President and Chief Executive Officer of HP Management and as a
director of Conifer Realty since their formation. Nelson Leenhouts was the
founder, and a co-owner, together with Norman Leenhouts, of Home Leasing, and
served as President of Home Leasing since 1967. He is a director of Hauser
Corporation. Nelson Leenhouts is a graduate of the University of Rochester.
He is the twin brother of Norman Leenhouts.
Richard J. Crossed, 57, has served as Executive Vice President and a
director of the Company and as a director, President and Chief Executive
Officer of Conifer Realty since January 1, 1996. He served as President and
Chief Executive Officer of Conifer Development, Inc. and C.O.F. (formerly
Conifer Realty, Inc.) (collectively, "Conifer") from 1985. Before becoming
President of Conifer, he served as Director of Development for Conifer. Mr.
Crossed is a director of the St. Joseph's Villa and is active in many housing
organizations. He has served on the New York State Housing Turnkey Task force
and New York State Low-Income Housing Tax Credit Task Force. Mr. Crossed is a
graduate of Bellarmine College.
Amy L. Tait, 38, has served as Executive Vice President and a director of
the Company since its inception in 1993. She has also served as a director of
HP Management since its formation. Mrs. Tait joined Home Leasing in 1983 and
has had several positions, including Senior and Executive Vice President and
Chief Operating Officer. She currently serves on the M & T Bank Advisory
Board and the boards of the United Way of Rochester and GeVa Theatre.
Mrs. Tait is a graduate of Princeton University and hold a Masters degree in
Business Administration from the William E. Simon Graduate School of Business
Administration of the University of Rochester. She is the daughter of Norman
Leenhouts.
Burton S. August, Sr., 81, has been a director of the Company since
August, 1994. Mr. August is currently a director of Monro Muffler Brake, Inc.,
a publicly traded company where Mr. August served as Vice President from 1969
until he retired in 1980. Mr. August is also a trustee emeritus of Rochester
Institute of Technology, a trustee of Strong Museum and a trustee of the
Otetiana Council Boy Scouts of America.
William Balderston, III, 69, has been a director of the Company since
August, 1994. From 1991 to the end of 1992 was an Executive Vice President of
The Chase Manhattan Bank, N.A. From 1986 to 1991, he was President and Chief
Executive Officer of Chase Lincoln First Bank, N.A., which was merged into The
Chase Manhattan Bank, N.A. He is a director of Bausch & Lomb Incorporated and
Rochester Gas and Electric Corporation, as well as a Trustee of the University
of Rochester. Mr. Balderston is a graduate of Dartmouth College.
Alan L. Gosule, 56, has been a director of the Company since December,
1996. Mr. Gosule has been a partner in the law firm of Roger & Wells, New
York, New York, since August, 1991 and prior to that time was a partner in the
law firm of Gaston & Snow. He serves as Chairman of the Rogers & Wells Tax
Department and Real Estate Securities practice group. Mr. Gosule is a
graduate of Boston University and its Law School and received a LL.M. from
Georgetown University. Mr. Gosule also serves on the Boards of Directors of
15 funds of the Northstar Mutual Funds, the Simpson Housing Limited Partnership
and F.L. Putnam Investment
-3-
Management Company. Rogers & Wells acted as counsel
to Coopers & Lybrand LLP in its capacity as advisor to the State Treasurer of
the State of Michigan in connection with its investment of retirement funds in
the Operating Partnership and Mr. Gosule was the nominee of the State Treasurer
under the terms of the investment agreements described above.
Leonard F. Helbig, III, 51, has been a director of the Company since
August, 1994. Mr. Helbig has served as Executive Managing Director of the
Asset Services Group and a Director of Cushman & Wakefield since
1984. He joined Cushman & Wakefield in 1980 and is also a member of that
firm's Executive and National Management Committees. Mr. Helbig is a member
of the Urban Land Institute, the Pension Real Estate Association and the
International Council of Shopping Centers. Mr. Helbig is a graduate of
LaSalle University and holds the MAI designation of the American
Institute of Real Estate Appraisers.
Roger W. Kober, 63, has been a director of the Company since August,
1994. Mr. Kober is the Chairman of the Board and Chief Executive Officer of
Rochester Gas and Electric Corporation where he has been employed since 1965.
He is also a member of the Board of Trustees of Rochester Institute of
Technology and a director of the Association of Edison Illuminating Companies,
the Chase Upstate Advisory Council, the Greater Rochester Metro Chamber of
Commerce and the United Way of Greater Rochester, Inc. Mr. Kober is a
graduate of Clarkson College and holds a Masters Degree in Engineering from
Rochester Institute of Technology.
Clifford W. Smith, Jr., 50, has been a director of the Company since
August, 1994. Mr. Smith has been the Clarey Professor of Finance of the
William E. Simon Graduate School of Business Administration of the University
of Rochester since 1988. He has written numerous books, monographs, articles
and papers on a variety of financial, capital markets, risk management and
accounting topics and has held a variety of editorial positions on a number of
journals. Mr. Smith is a graduate of Emory University and holds a Doctor of
Economics from the University of North Carolina at Chapel Hill.
Paul L. Smith, 61, has been a director of the Company since August, 1994.
Mr. Smith was a director, Senior Vice President and the Chief Financial Officer
of the Eastman Kodak Company from 1983 until he retired in 1993. He is
currently a director of Performance Technology, Inc., BioWorks, Inc.,
Rochester General Hospital and GeVa Theatre and is a member of the
Board of Trustees of the George Eastman House. Mr. Smith is a graduate of
Ohio Wesleyan University and holds an MBA Degree in finance from Northwestern
University.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
BOARD OF DIRECTORS. The Company is managed by a Board of Directors
composed of eleven members, a majority of whom are independent of the Company's
management (the "Independent Directors"). The Board of Directors met six times
in 1996. Each of the directors attended at least 75% of the meetings of the
Board of Directors and any committees of which the director served during 1996.
AUDIT COMMITTEE. Paul Smith, Roger Kober and Leonard Helbig form the
Audit Committee of the Board of Directors. Alan Gosule joined the Committee at
the beginning of 1997. The Audit Committee recommends the engagement of
independent public accountants, reviews the scope of the audit engagement and
any other services, reviews the independent public accountants' letter of
comments and management's responses to those comments, approves other
professional services provided by the independent public accountants, reviews
the independence of the independent public accountants, reviews any major
accounting changes made or contemplated, reviews the adequacy of the Company's
internal accounting controls. The Audit Committee consists solely of
Independent Directors. It met twice during 1996.
COMPENSATION COMMITTEE. Burton August, William Balderston and Clifford
Smith form the Compensation Committee of the Board of Directors. Alan Gosule
joined the Committee at the beginning of 1997. The Compensation Committee
establishes remuneration levels for officers of the Company, reviews
significant
-4-
employee benefit programs and establishes and administers executive
compensation programs, including bonus plans, stock option and other
equity-based programs, deferred compensation plans and any other cash or stock
incentive programs. The Compensation Committee consists solely of Independent
Directors and met four times during 1996.
The Board of Directors does not have a standing nominating committee.
The entire Board of Directors considers Board composition and nominees,
performing the function of a nominating committee.
COMPENSATION OF DIRECTORS
In 1996, the Company paid its directors who are not employees of the
Company annual compensation of $9,000 plus $1,000 per day for attendance (in
person or by telephone) at Board and committee meetings. Effective January 1,
1997, the annual director fee was increased to $10,000 per year. Directors of
the Company who are employees of the Company do not receive any compensation
for their services as directors. All
directors are reimbursed for their expenses incurred in attending directors'
meetings. Pursuant to the Company's Stock Benefit Plan, each non-employee
director (other than Mr. Gosule) was granted options to purchase 3,000 shares
of Common Stock immediately following the annual meeting of stockholders in
1996. The options have an exercise price equal to the fair market value of
the Company's Common Stock on the date of grant. The Stock Benefit Plan does
not have additional options available for awards to directors. Subject to
stockholder approval of the changes to the Stock Benefit Plan described in
Proposal 3, the Board has approved additional awards to each director of
options to purchase 3,500 shares of Common Stock immediately following the
annual meeting of stockholders in each of 1997, 1998 and 1999 at an exercise
price equal to the fair market value of the Company's Common Stock on the date
of grant. In addition, stockholder approval of the proposed changes to the
Stock Benefit Plan would ratify the grants of options to purchase 4,554 shares
of Common Stock in August 1996 in connection with the Executive and Director
Stock Purchase and Loan Program described below. Please also review Proposal 3.
-5-
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid during 1994,
1995 and 1996 to the Company's Co-Chief Executive Officers and other most
highly compensated executive officers. Except for the Co-Chief Executive
Officers, no executive officer's annual salary and bonus exceeded $100,000 on
an annualized basis during the fiscal years ending December 31, 1994 and 1995.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual AWARDS
COMPENSATION Shares
Underlying
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS
- --------------------------- ---- ------ ----- ------------
Norman P. Leenhouts
Chairman and Co-Chief
Executive Officer 1994(1) $ 50,000 $14,556 88,000 sh.
1995 132,000 0 0
1996 145,200 59,702 7,338 sh.(3)
Nelson B. Leenhouts
President and Co-Chief
Executive Officer 1994(1) $ 50,000 $14,556 88,000 sh.
1995 132,000 0 0
1996 145,200 59,702 7,338 sh.(3)
Richard J. Crossed 1996(2) $145,200 $59,702 7,338 sh.(3)
Executive Vice President
Amy L. Tait 1994(1) $ 33,333 $16,495 88,000 sh.
Executive Vice President 1995 87,917 0 0
1996 103,000 42,351 5,206 sh.(3)
________________
(1) Amounts reported reflect actual base salary earned during the Company's
period of operations from August 4, 1994 through December 31, 1994. The
annual base salary of each of Norman and Nelson Leenhouts for 1994 was
$120,000 and for Amy Tait was $80,000..
(2) Mr. Crossed was not employed by the Company in 1994 and 1995.
(3) These options were granted under the Company's Stock Benefit Plan in
connection with the purchase of the Company's common stock under the
Executive and Director Stock Purchase and Loan Program described below. The
options are exercisable for ten years at $20.50 per share and vest over
five years.
OPTION GRANTS IN FISCAL YEAR 1996
The following table sets forth certain information relating to the
options granted with respect to fiscal year ended December 31, 1996. The
columns labelled "Potential Realizable Value" are based on hypothetical 5% and
10% growth assumptions in accordance with the rules of the Securities and
Exchange Commission. The Company cannot predict the actual growth rate of the
Common Stock.
-6-
OPTION GRANTS IN LAST FISCAL YEAR{*}
INDIVIDUAL GRANTS
Percent of Potential Realizable Value
Number of Total Options at Assumed Annual Rates of
Shares Granted to Stock Price Appreciation For
Underlying Employees in Exercise or Base Expiration OPTION TERM
NAME Options ---------------------------
Granted Fiscal Price DATE 5% 10%
Year ($/SH)
- ------------------- -------- ------- -------- ------- ----------- -----------
Norman P. Leenhouts 7,338 (1) $20.50 8/12/2006 $ 94,587 $ 239,732
Nelson B. Leenhouts 7,338 (1) $20.50 8/12/2006 $ 94,587 $ 239,732
Richard J. Crossed 88,000 (2) $19.00 1/2/2006 $1,051,600 $2,664,640
7,338 (1) $20.50 8/12/2006 $ 94,587 $ 239,732
Amy L. Tait 5,206 (1) $20.50 8/12/2006 $ 67,105 $ 170,080
____________
* Stock appreciation rights were not granted in 1996.
(1) These stock options were granted in connection with the purchase by the
named individuals of shares of Common Stock under the Executive and
Director Stock Purchase and Loan Program described below. An option to
purchase .25 shares of Common Stock was granted, with an exercise price
equal to fair market value on the date of grant, for each share purchased.
(2) Issued in connection with the Conifer Transaction (described below).
- 7 -
OPTION EXERCISES AND YEAR-END OPTION VALUES
No options were exercised in 1996. The following table sets forth the value
of options held at the end of 1996 by the Company's named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES{(1)}
Number of Shares
Number of Underlying Unexercised Value of Unexercised in-
Shares OPTIONS AT FISCAL YEAR-END the-
Acquired on Value Money Options at
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------- ---------- --------- ----------- -------------
Norman P. Leenhouts 0 0 88,000 sh. 7,338 sh. $308,000 $ 14,676
Nelson B. Leenhouts 0 0 88,000 sh. 7,338 sh. $308,000 $ 14,676
Richard J. Crossed 0 0 88,000 sh. 7,338 sh. $308,000 $ 14,676
Amy L. Tait 0 0 35,200 sh. 58,006 sh. $123,200 $195,212
(1) Stock appreciation rights were not granted in 1996.
(2) Based on the last reported sale price of the Common Stock on the NYSE on
December 31, 1996 of $22.50 less the per Share exercise price of the
options.
EMPLOYMENT AGREEMENTS
Norman and Nelson Leenhouts entered into employment agreements with the
Company prior to its initial public offering providing for an initial term of
five years commencing August 4, 1994. The agreements provide for the
employment of Norman P. Leenhouts as Chairman of the Board and Co-Chief
Executive Officer of the Company at an annual base salary of $120,000 and
Nelson B. Leenhouts as President and Co-Chief Executive Officer of the Company
and President and Chief Executive Officer of HP Management at an annual base
salary of $120,000. The base salaries under each employment agreement
automatically increase by 10% each year starting January 1, 1995. Although
their employment agreements provide for a specific formula for the payment of
incentive compensation to each of Norman and Nelson Leenhouts, they have
voluntarily agreed to waive application of that formula and instead receive
incentive compensation pursuant to the Company's Incentive Compensation Plan as
it may be revised by the Compensation Committee from time to time. The
employment agreements also provide that if employment is terminated by the
Company or not renewed without cause, or terminated by the executive for good
reason at any time, then the executive is entitled to receive a severance
payment equal to the executive's annual base salary and incentive compensation
for the preceding year multiplied by two or the number of years remaining of
the initial term, whichever is greater.
Pursuant to their respective employment agreements with the Company,
Norman and Nelson Leenhouts are each subject to a covenant not to compete with
the Company during the term of his employment and, if
-8-
either is terminated by
the Company for cause or resigns without good reason, for two years thereafter.
The covenants prohibit Norman and Nelson Leenhouts from participating in the
management, operation or control of any multifamily residential business which
is competitive with the business of the Company, except that they,
individually and through Home Leasing and its affiliates, may continue to own
and develop the properties managed by HP Management. The Leenhoutses have also
agreed that any commercial property which may be developed by them will be
managed by HP Management subject to the approval of the outside members of the
Board of Directors.
Richard J. Crossed also entered into and Employment Agreement with the
Company, effective January 1, 1996. The terms of that agreement are
substantially the same as the employment agreements entered into by Norman and
Nelson Leenhouts as described above. The initial term is for five years and
identical termination provisions are provided. In his employment agreement,
Mr. Crossed has agreed not to compete with the Company during the term of his
employment and, if he is terminated by the Company for cause or resigns without
good reason, for three years thereafter.
INCENTIVE COMPENSATION PLAN
The Company's incentive compensation plan (the "Incentive Plan") for
officers and key employees of the Company was amended for 1996 to provide that
eligible officer and key employees may earn a cash bonus ranging from 5% to 50%
of base salary based on increases in the Company's Funds from Operations per
Share ("FFO"). The 1996 Incentive Plan provides for a bonus pool to be
established as follows:
PERCENT OF GROWTH
GROWTH IN FFO/SHARE CONTRIBUTED TO BONUS POOL
First 2% 0%
Next 1% 20%
Next 1% 30%
Next 1% 40%
Growth Over 5% 50%
A factor is applied to each eligible participant's salary, ranging from
1% to 10%, to determine the split of the bonus pool. The factor applied to the
salaries of Norman and Nelson Leenhouts, Richard Crossed and Amy Tait is 10%,
with the maximum bonus payable to them being 50% of their base salary.
EXECUTIVE AND DIRECTOR STOCK PURCHASE AND LOAN PROGRAM
In August 1996, the Board of Directors approved an Executive and Director
Stock Purchase and Loan Program. Pursuant to the program, each officer and
director of the Company was eligible to receive loans for the purchase of
Common Stock under the Company's Dividend Reinvestment, Stock Purchase,
Resident Stock Purchase and Employee Stock Purchase Plan ("Dividend
Reinvestment Plan") and receive options to purchase Common Stock under the
Company's Stock Benefit Plan. The one-time program provided for loans up to a
formula amount for each officer based on salary and bonus category and up to
$60,000 for each independent director. The Company loaned approximately 50% of
the purchase price and arranged loans from a commercial bank, guaranteed by the
Company, for the balance. The program also provided for the issuance of stock
options to purchase .25 shares of Common Stock at the fair market value on the
date of issuance ($20.50) for each share of Common Stock purchased. In the
aggregate, eighteen officers purchased 190,345 shares of Common Stock and
received 47,592 options to purchase Common Stock at an exercise price of $20.50
vesting over five years. The six independent directors purchased an aggregate
of 18,198 shares of Common Stock and received options to purchase 4,554 shares
of Common Stock for $20.50 per share vesting over five years. The Company
loaned the directors and officers an aggregate of $2,063,469 maturing on August
31, 2016 with simple interest at 7% and guaranteed bank loans totalling
$2,033,180 repayable from the quarterly dividends on the stock and the proceeds
of any sale of the stock.
- 9 -
PERFORMANCE GRAPH
The following graph compares the cumulative return on the Company's
Common Stock since its initial public offering in August 1994 through December
31, 1996 to the cumulative return of the NAREIT All Equity REIT Index and the
Standard and Poor's 500 Index for the same period. The total return assumes
that dividends were reinvested quarterly and is based on a $100 investment on
August 1, 1994. Stockholders should note that the period covered by the graph
is very short and that past performance does not predict future results.
[GRAPH APPEARS HERE]
8/4/94 12/31/94 12/31/95 12/31/96
Company Common Stock $100 $104.65 $100.25 $143.32
NAREIT All Equity REIT Index 100 98.45 113.49 153.51
S&P 500 Index 100 101.53 139.54 171.58
- 10 -
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors establishes
performance criteria, reviews and administers compensation and benefits for
executive officers of the Company and broad-based compensation plans for the
other officers and employees generally. The Compensation Committee consists
only of Independent Directors. The objectives of the Company's compensation
program as adopted by the Compensation Committee are as follows: to enhance
stockholder value by attracting and retaining highly capable employees who are
motivated to reach the Company's operating and financial goals, to encourage
ownership of the Company's stock and to link compensation to the performance of
the Company and to total shareholder returns in order to align interests of
executives and other employees with those of its stockholders. The
compensation program for the Company's executive officers has three components:
base salary, annual incentive compensation under the Incentive Plan, and awards
under the Company's Stock Benefit Plan. In evaluating compensation, the
Compensation Committee looks at both the performance of the Company and
shareholder returns, taking into account such factors as general market
conditions. It is the Committee's policy that executive compensation should be
deductible to the Company for federal income tax purposes. The Committee will
annually consider compensation decisions in light of the limit on deductibility
under Section 162(m) of the Internal Revenue Code and related regulations.
SALARY. For the five-year period beginning on August 4, 1994 and ending
August 4, 1999, the base salaries for the Company's Co-Chief Executive
Officers, Norman and Nelson Leenhouts were established in employment agreements
("Employment Agreements"), dated August 4, 1994, with base salaries starting at
an annual level of $120,000 for 1994 and increasing by 10% annually over the
preceding year. Effective on his joining the Company on January 1, 1996,
Richard Crossed entered into an employment agreement on essentially the same
terms as those of the Leenhoutses Employment Agreements.
The Committee reviewed the recommendations of the Co-Chief Executive
Officers for proposed salaries for the other executive officers for 1997 in
light of the responsibilities and personal performance of such officers and the
compensation of persons with similar responsibilities in other entities located
in the geographic regions in which the Company operates. The Committee expects
to make an annual review of salaries of the other executive officers in light
of those factors and others relevant to the compensation objectives of the
Company at the time of review.
The 1996 salaries of certain officers of the Company who were formerly
officers of Conifer Realty, Inc. were set forth in the Contribution Agreement
entered into between Home Properties of New York, L.P. and Conifer and certain
of its affiliates (the "Contribution Agreement"). The Contribution Agreement
related to the acquisition by Home Properties of New York, L.P. (the "Operating
Partnership") of Conifer and its affiliates. The full Board of Directors
approved the terms of the Contribution Agreement, including the salaries of
those officers.
INCENTIVE COMPENSATION. The Incentive Plan provides cash bonuses based
on increases in the Company's FFO. The Incentive Plan, originally adopted in
1994 was amended for 1995. The Leenhoutses voluntarily agreed to accept their
incentive compensation pursuant to the Incentive Plan rather than as provided
in their Employment Agreements. The formula contained in their Employment
Agreements would have resulted in higher bonuses. The Compensation Committee
determined that the two Co-Chief Executive Officers were entitled to have the
maximum factor of 10% applied to their salaries for purposes of determining
their share of the bonus pool, with the maximum bonus payable to them under the
Plan being 50% of base salary. One-half of the Co-Chief Executive Officers'
bonus was made nondiscretionary and one-half payable in the discretion of the
Committee.
The Committee expects to continually review the Plan as it applies to
1997 and future years. Some changes to the Plan, as well as to awards for
1997, may result.
- 11 -
STOCK COMPENSATION. Initial awards of stock options under the Company's
Stock Benefit Plan were made at the time of the Company's initial public
offering. All of the initial stock options were granted with an exercise price
of $19.00, the initial public offering price of the Company's Common Stock.
Norman and Nelson Leenhouts were each granted immediately exercisable options
to purchase 88,000 shares of Common Stock. Amy Tait was awarded options to
purchase 88,000 shares of Common Stock, vesting over five years. The balance
of the awards, to executive officers and other employees, vest 20% per year.
Pursuant to the Contribution Agreement, Richard J. Crossed was granted
immediately exercisable options to purchase 88,000 shares of Common Stock at an
exercise price of $19.00 per share under the Stock Benefit Plan.
The Compensation Committee reviewed the number of options granted to the
Co-Chief Executive Officers and other executive officers in light of the other
elements of their compensation and their overall equity interest in the
Company's business, principally through ownership of units of limited
partnership interest in the Operating Partnership, and determined to encourage
officers to acquire additional Common Stock and options through a one-time
Executive and Director Stock Purchase and Loan Program. The Compensation
Committee believes that such ownership ties the interests of senior executives
closely with those of shareholders to provide them greater incentive to manage
the Company to increase shareholder returns.
The Board of Directors adopted the Executive and Director Stock Purchase
and Loan Program which, among other things, provided for loans up to a formula
amount for each officer, including executive officers, based on salary and
bonus category. The Company loaned approximately 50% of the purchase price and
arranged loans from a commercial bank, guaranteed by the Company, for the
balance. The program also provided for the issuance of stock options to
purchase .25 shares of Common Stock at the fair market value on the date of
issuance ($20.50) for each share of Common Stock purchased. Pursuant to the
program, each of the named executive officers purchased the maximum number of
shares available with the provided loans, 29,352 shares for $580,817 for each
of the Co-Chief Executive Officers and Mr. Crossed) and received options to
purchase additional shares (options to purchase 7,338 shares at $20.50 per
share for each of the Co-Chief Executive Officers and Mr. Crossed).
Respectfully submitted,
THE COMPENSATION COMMITTEE
Burton S. August, Sr.
William Balderston, III
Clifford W. Smith, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
During the fiscal year 1996, the Compensation Committee was comprised of
Burton S. August, Sr., William Balderston, III and Clifford W. Smith, Jr. None
of them have ever been an officer of the Company or any of its subsidiaries.
Alan L. Gosule joined the Committee at the beginning of 1997. Each of the
Compensation Committee members other than Mr. Gosule, as well as each of the
other independent directors, participated in the Company's Executive and
Director Stock Purchase and Loan Program on August 12, 1996 and purchased 3,033
shares of Common Stock through the Company's Dividend Reinvestment and Stock
Purchase Plan for $19.788 per share (3% below the five-day average market value
as provided in that Plan) and received options to purchase 759 shares of Common
Stock at the fair market value on that date of $20.50 per share. The purchases
were financed 50% by a loan from the Company due August 31, 2016 bearing simple
interest at 7% per annum and 50% by a loan from a commercial bank arranged by
and guaranteed by the
-12-
Company. Mr. August also had an interest in the
transactions consummated in January 1996 because he and members of his
immediate family had interests in a limited partnership merged into the
Operating Partnership as
part of the Conifer Transaction. In connection with such merger, Mr. August
received 4,246 Units in the Operating Partnership, and his immediate family
members received 5,404 Units in the Operating Partnership, as merger
consideration.
STOCK BENEFIT PLAN
GENERAL
The Company adopted its 1994 Stock Benefit Plan (the "Stock Benefit
Plan") for the purpose of providing persons responsible for the future success
of Home Properties, including directors, officers, regional managers and on-
site property managers, with increased motivation and incentives to exert their
best efforts on behalf of the Company by enlarging their personal stake in its
success. The number of employees participating in the Stock Benefit Plan is
approximately 64. Certain amendments to the Stock Benefit Pan are proposed;
see Proposal 3. The Stock Benefit Plan limits the number of shares of Common
Stock issuable pursuant to the Plan, as increased in 1996, to 1,000,000 shares,
of which options to purchase 649,224 shares were granted to employees and
54,000 options were granted to non-employee directors (3,000 each at initial
election to the Board and after each annual meeting of stockholders). An
additional 4,554 options were granted to directors (subject to shareholder
approval of the increase in option shares available for directors under
Proposal 3) on August 12, 1996 in connection with their purchases of Common
Stock pursuant to the Executive and Director Stock Purchase and Loan Program
described above The number of shares reserved under the Stock Benefit Plan is
subject to adjustment upon certain recapitalizations and other corporate
transactions. The following summary of the Stock Benefit Plan is qualified in
its entirety by reference to the full text of the Stock Benefit Plan, and the
proposed amended and restated text of the Stock Benefit Plan incorporating the
changes described in Proposal 3, copies of which may be obtained from the
Secretary of the Company.
The Board of Directors may amend, suspend or discontinue the Stock
Benefit Plan at any time except that certain specified amendments must be
approved (at a meeting held within twelve months before or after the date of
such amendment) by the holders of a majority of the issued and outstanding
shares of capital stock of the Company entitled to vote. The proposed
amendments to the Stock Benefit Plan allow the Board of Directors to amend the
Stock Benefit Plan unless the Board determines that applicable laws or rules of
governmental entities or regulations of the New York Stock Exchange or similar
bodies require shareholder approval for such amendments to preserve the
benefits of the Plan for the Company and the participants. The proposed
amendments would permit the Board of Directors to increase the benefits
available under the Stock Benefit Plan and change the allocation of benefits
between employees and non-employee directors. The Stock Benefit Plan may not
be amended to adversely affect awards outstanding prior to the amendment.
EMPLOYEE AWARDS
The Stock Benefit Plan provides for the grant of "incentive stock
options" within the meaning of Section 422 of the Code, non-statutory stock
options, stock appreciation rights and restricted stock awards to employees of
the Company. The Stock Benefit Plan is administered by the Compensation
Committee of the Board of Directors, none of the members of which will
participate in employee awards under the Stock Benefit Plan. The Compensation
Committee determines the persons to be granted options, the number of shares
subject to each option, whether or not such option is a non-statutory or
incentive stock option, the exercise price and exercise schedule, the manner in
which payment may be made and whether such persons will have the right to
receive cash or shares in lieu of exercising their options. The exercise price
may not be less than 100% of the fair market value of the Company's Common
Stock on the date of grant. The Compensation Committee may grant an option
holder the right to elect to receive cash or shares in an amount equal to the
excess of the fair market value of the shares subject to an incentive or non-
statutory option over the exercise price for such
-13-
<PAGE
shares, which right can be
exercised instead of (but not in addition to) its related incentive or non-
statutory option (a stock appreciation right). There is no limit on the number
of non-statutory options that may be granted to any one individual under the
Plan, provided that the grant of the options may not cause the Company to fail
to qualify as a REIT for federal income tax purposes. An optionee may, with
the consent of the
Compensation Committee, elect to pay for the shares to be received upon
exercise of his or her options in cash, shares (including shares issuable upon
exercise of an option) or any combination thereof. Options may not be
exercisable for more than a ten-year period. Options generally terminate three
months after the optionee's termination of employment from the Company for any
reason other than death or disability, and are not transferable by the optionee
other than by will or the laws of descent and distribution.
Awards of restricted stock will consist of shares of Common Stock which
may be subject to forfeiture and restrictions on transfer as determined by the
Compensation Committee. In general, a participant who has been granted
restricted stock will have the benefits of ownership in respect of such shares,
including the right to vote such shares and to receive dividends and other
distributions thereon from the date of grant, subject to the restrictions
imposed in the grant or as set forth in the Stock Benefit Plan.
DIRECTOR'S OPTIONS
Under the Stock Benefit Plan, the initial non-employee directors of the
Company were granted a non-statutory option to purchase 3,000 shares in
connection with their initial election to the Board and received grants of
options to purchase 3,000 shares immediately following the stockholders'
meetings in 1995 and 1996. The exercise price for each option grant is 100% of
the fair market value of the Company's Common Stock on the date of grant. Each
director's option has a five-year term. Subject to stockholder approval of
the changes to the Stock Benefit Plan described in Proposal 3, the Board has
approved additional awards to each director of options to purchase 3,500 shares
of Common Stock immediately following the annual meeting of stockholders in
each of 1997, 1998 and 1999 at an exercise price equal to the fair market value
of the Company's Common Stock on the date of grant. In addition, subject to
shareholder approval of Proposal 3, the directors (other than Mr. Gosule) were
each issued options to purchase 759 shares of Common Stock at $20.50 on August
12, 1996 in connection with their purchases of Common Stock under the Executive
and Director Stock Purchase and Loan Program.
FEDERAL TAX CONSEQUENCES
NON-STATUTORY OPTIONS. No income is recognized by a participant at the
time of grant of a non-statutory option, nor is the Company entitled to a tax
deduction at that time. The rules for recognizing income upon exercise of a
non-statutory option depend on whether or not the participant is an "insider",
I.E., the participant's sale or purchase of Common Stock may give rise to suit
under Section 16(b) of the Securities Exchange Act of 1934, as amended
("Section 16(b)"). In the case of a non-insider, ordinary income will be
recognized by the participant on the date he or she exercises a non-statutory
option in an amount equal to the excess of the fair market value of the shares
on the date of exercise over the exercise price. The holding period for
capital gain and loss purposes will begin on the date of exercise. In the case
of an insider, ordinary income will be recognized by the participant on the
first day on which a sale of the Common Stock at a profit would not expose the
participant to Section 16(b) liability (the "date of taxation") in an amount
equal to the excess of the fair market value of the shares on the date of
taxation over the exercise price. The holding period for capital gain and loss
purposes will begin on the date of taxation. An insider may elect to be taxed
according to the rules applicable to non-insiders by filing an election with
the Internal Revenue Service under Section 83(b) of the Internal Revenue Code
within 30 days from the date of exercise. The Company will be entitled to a
deduction at the time the participant is required to recognize income from the
exercise of the non-statutory option. The deduction will be equal to the
amount which is taxable to the participant as ordinary income as a result of
the exercise.
-14-
If the exercise price of a non-statutory option is paid by surrendering
Common Stock of the Company, the participant will recognize no gain or loss on
the shares that he or she surrenders to pay the exercise price (the
"surrendered shares"). The number of shares that the participant receives upon
exercise of the option in excess of the surrendered shares are considered
"additional shares." The participant will recognize ordinary income upon the
exercise equal to the fair market value of the additional shares on the date of
exercise, less any cash paid towards the exercise price. The basis of the
additional shares will be equal to their fair market value
on the date of exercise, and their holding period will begin on that date. The
shares that the participant receives upon exercise equal to the surrendered
shares will have a basis and holding period equal to that of the surrendered
shares.
The basis of shares acquired pursuant to the exercise of a non-statutory
option will be the amount included in ordinary income due to receipt of those
shares. When the participant disposes of shares acquired pursuant to a non-
statutory option, any amount realized in excess of the basis of the shares will
be treated as long-term or short-term capital gain, depending on the holding
period of the shares. If the amount realized is less than the basis of the
shares, the loss will be treated as a long-term or short-term capital loss,
depending on the holding period of the shares.
INCENTIVE STOCK OPTIONS. A participant receiving an incentive stock
option will not be subject to income tax upon either the grant of the incentive
stock option or its subsequent exercise. The spread between the exercise price
and the fair market value on the date of exercise will, however, be included in
the participant's alternative minimum taxable income for purposes of
determining the participant's liability, if any, for the alternative minimum
tax. If the participant holds the shares acquired upon exercise for more than
one year after exercise (and two years after grant), then the difference
between the amount realized on a subsequent sale or other taxable disposition
of the shares and the exercise price will constitute long-term capital gain or
loss at the time of sale. The Company will not be entitled to a federal income
tax deduction with respect to the grant or exercise of an incentive stock
option. If the options cease to be incentive stock options for any reason,
they will be treated as non-statutory options. For example, if the participant
sells the shares before the expiration of the requisite holding periods, he or
she will be deemed to have made a "disqualifying disposition" of the shares and
will realize ordinary income in the year of the disposition. In the event of a
disqualifying disposition, the Company will be entitled to a federal income tax
deduction in the year of disposition of the shares in the amount of the
ordinary income realized by the participant.
If the exercise price of an incentive stock option is paid by
surrendering Common Stock of the Company, the Internal Revenue Service treats
such exchange as if there were two transactions. The first transaction is
treated as a non-taxable exchange of the previously-acquired Common Stock for
an equal number of shares of new Common Stock, both having the same market
value. The basis of the new shares will be the same basis as the shares
surrendered and the holding period will include the holding period of the
shares surrendered. The second transaction concerns the additional shares that
a participant will receive pursuant to the exercise. This exchange also
results in no gain or loss being recognized at the time of the exchange.
However, the basis of these additional shares will equal zero (I.E., the
participant is treated as having paid nothing for these shares). The holding
period for the additional shares begins on the date of the exchange.
STOCK APPRECIATION RIGHTS. A participant will be subject to tax, at
ordinary income rates, on the amount of cash received upon the exercise of any
Stock Appreciation Rights, and the Company will be entitled to a tax deduction
equal to such amount.
- 15 -
NEW PLAN BENEFITS
The following table sets forth the information relating to all options
made or which will be made pursuant to the proposed amendments to the Stock
Benefit Plan. Additional awards may be made from time to time under the Stock
Benefit Plan to directors, executive officers and other employees in the
discretion of the Compensation Committee.
Stock Benefit Plan - New Plan Benefits under Proposed Amendments
Dollar Number
Name and Position Value($) of Shares
- ------------------------------- ---------- ----------
Norman P. Leenhouts
Chairman and Co-Chief Executive Officer $0 (1)
Nelson B. Leenhouts
President and Co-Chief Executive Officer $0 (1)
Richard J. Crossed
Executive Vice President $0 (1)
Amy L. Tait
Executive Vice President
$0 (1)
Executive Officers as a Group $0 (1)
Non-Employee Directors as a Group $17,647(2) 4,554 sh.(3)
Other Employees as a Group $0 (1)
____________
(1) The proposed amendments do not increase the number of shares available for
awards to employees and the Company cannot anticipate the number of
additional awards which may be made to executive officers or other
employees.
(2) The options are exercisable at $20.50 per share, based on the closing price
of the Common Stock on August 12, 1996, the date of the grant. The closing
price of the Common Stock on March 5, 1997 was $24.375. The options may be
exercised for ten years and vest over five years.
(3) In addition, each non-employee director who continues to serve will receive
awards of 3,500 options exercisable for five years at the fair market value
on the date of grant after the annual meeting of shareholders in each of
1997, 1998 and 1999.
- 16 -
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of February 24, 1997 regarding
the beneficial ownership of shares of Common Stock by (i) directors, nominees
and certain executive officers of Home Properties, and (ii) directors, nominees
and executive officers of Home Properties as a group, and (iii) each person
known by the Company to be the beneficial owner of more than a 5% interest in
the Company. The table also includes information relating to the number and
percentage of shares of Common Stock and partnership units of the Operating
Partnership ("Units") beneficially owned by the persons included in (i) and
(ii) above (such Units are exchangeable into shares, or cash at the election of
the independent directors of the Company. In preparing this table, the Company
has relied on information supplied by its officers, directors, Nominees and
certain stockholders, and upon information contained in filings with the SEC.
Name and Address Number of Shares Percentage of Number of Shares/ Percentage of
of Beneficial Owner Beneficially Owned Outstanding
Shares(2) Units Owned Shares/Units
- --------------------- ----------------- ------------- ---------------- --------------
Norman P. Leenhouts 118,353 (1) 1.9% 387,513 (1)(3) 4.1% (4)
Nelson B. Leenhouts 117,453 (1) 1.8% 386,365 (1)(3) 4.1% (4)
Richard J. Crossed 118,852 (5) 1.9% 313,816 (5) 3.3%
Amy L. Tait 59,268 (6) * 73,011 (6) *
Burton S. August, Sr. 30,533 (8) * 34,779 (7)(8) *
William Balderston, III 13,533 (7) * 13,533 (7) *
Alan L. Gosule 0 * 0 *
Leonard Helbig, III 13,206 (7) * 13,206 (7) *
Roger W. Kober 13,220 (7) * 13,220 (7) *
Clifford W. Smith, Jr..... 16,935 (7) * 16,935 (7) *
Paul L. Smith 14,033 (7) * 14,033 (7) *
All executive officers and
directors as a group
(13 persons) 554,571 (9) 8.3% (10) 1,303,141(3)(9) 17.9% (11)
- 17 -
Name and Address Number of Shares Percentage of
of Beneficial Owner Beneficially Owned Outstanding Shares
- ------------------------- ------------------ ------------------
Capital Growth Management 317,000 (12) 5.42%
Limited Partnership
One International Place
Boston, MA 02110
Miller Anderson & Sherrerd 512,200 (13) 8.81%
One Tower Bridge
West Conshohocken, PA 19428
and
Morgan Stanley Group Inc.
1585 Broadway
New York, NY 10036
Palisade Capital Management L.L.C. 502,000 (14) 8.2%
1 Bridge Plaza, Suite 695
Fort Lee, NJ 07024
State Treasurer, State of
Michigan 1,666,667 (15) 26.76%
Bureau of Investments
Department of Treasury
Treasury Building, Box 15128
Lansing, MI 48901
__________
* Less than 1%
(1) Includes 88,000 shares which may be acquired upon the exercise of currently
exercisable options by each of Norman and Nelson Leenhouts.
(2) Assumes that all options included with respect to the person have been
exercised. The total number of shares outstanding used in calculating the
percentage assumes that none of the options held by any other person have
been exercised.
(3) Includes Units owned by Home Leasing and Leenhouts Ventures. Norman
Leenhouts and Nelson Leenhouts are each directors, officers and 50%
stockholders of Home Leasing and each owns 50% of Leenhouts Ventures.
Includes 50,000 Units owned by the respective spouses of each of Norman and
Nelson Leenhouts as to which they disclaim beneficial ownership.
(4) Assumes that all options included with respect to the person have been
exercised and all Units included with respect to the person have been
exchanged for shares of Common Stock. The total number of shares
outstanding used in calculating the percentage assumes that none of the
options held by any other person have been exercised and that none of the
Units held by any other person have been exchanged for shares.
(5) Includes 88,000 shares which may be acquired upon the exercise of currently
exercisable options. Also includes Mr. Crossed's proportionate share of
Units owned by Conifer and its affiliates.
(6) Includes 35,200 shares which may be acquired upon the exercise of currently
exercisable options. Also includes 3,246 shares owned by Mrs. Tait's
spouse as to which she disclaims beneficial ownership. Mrs. Tait shares
voting and dispositive power with respect to 2,548 Units with her spouse.
(7) Includes 9,000 shares which may be acquired upon the exercise of currently
exercisable options.
(8) Includes 12,500 shares owned by immediate family members of Mr. August as
to which he disclaims beneficial ownership.
(9) Includes 406,000 shares which may be acquired upon the exercise of
immediately exercisable options.
(10)Assumes that all exercisable options included with respect to all listed
persons have been exercised.
(11)Assumes that all exercisable options included with respect to all listed
persons have been exercised and that all Units included with respect to all
listed persons have been exchanged for shares of Common Stock.
(12)Based on a report on Schedule 13G, dated February 11, 1997, reflecting that
Capital Growth Management Limited Partnership has shared dispositive and
sole voting power with respect to shares held in client accounts, as to
which Capital Growth disclaims beneficial ownership.
(13)Based on a report on Schedule 13G, dated February 14, 1997, filed jointly
on behalf of Miller Anderson & Sherrerd and Morgan Stanley Group Inc.,
reflecting that the two Investment Advisors have shared voting and
dispositive power with respect to 515,200 shares.
(14)Based on a report in Schedule 13G, dated February 1, 1997, reflecting that
Palisade Capital Management, L.L.C. holds the shares on behalf of clients
in accounts over which Palisade has sole voting and dispositive power.
(15)Based on a report on Form 13D, dated January 6, 1997, reflecting that the
State Treasurer, State of Michigan and the individual members of the
Michigan Department of Treasury's Bureau of Investments, which manages the
investments for four state-sponsored retirement systems: Public School
Retirement System, State Employees' Retirement System, Michigan State
Police Retirement System and Judges' Retirement System acquired a Class A
Limited Partnership Interest in the Operating Partnership which is
convertible, at the option of the State of Michigan, into 1,666,667 shares
of common stock, subject to adjustment, over which the State Treasurer
would have sole voting and dispositive power.
- 18 -
SECTION 16(A) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, (the
"Exchange Act") requires the Company's executive officers and directors, and
persons who own more than 10% of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and the New York Stock Exchange. Officers,
directors and greater than 10% shareholders are required to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required during the fiscal year ended December 31, 1996, all
Section 16(a) filing requirements applicable to its executive officers,
directors and greater than 10% beneficial owners were satisfied, except as
follows. Amy Tait's Form 4 for August 1996 with respect to her acquisition of
shares of Common Stock and options under the Company's Executive and Director
Stock Purchase and Loan Program did not reflect the acquisition of shares and
options by her husband, Robert Tait, a Vice President of the Company. The Form
4 was subsequently amended to reflect this omission. Burton August's interest
in 4,246 units in the Operating Partnership received in connection with the
Conifer Transaction were reported in the proxy statement for the 1996 Annual
Meeting of Shareholders and the Company's Annual Report on Form 10-K for 1995
but were not reflected on a Form 4 for January 1996. A Form 4 reflecting the
units was subsequently filed.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Certain directors and an executive officer of the Company (or entities
controlled by them or members of their immediate families) had direct or
indirect interests in transactions which were consummated in connection with
the acquisition of Conifer Realty, Inc. and certain affiliates on January 1,
1996 (the "Conifer Transaction"). The following persons received Units in
connection with the Conifer Transaction, and certain indebtedness was or will
be repaid by the Company:
Units Indebtedness
Name Received Repaid
---------------------------- --------- ------------
Burton August Sr. 4,246 0
Immediate family members of
Burton S. August, Sr. 5,404 0
Richard J. Crossed 68,021 0
Conifer Development, Inc. (1) 20,738 $1,433,190
C.O.F., Inc. (2) 285,403 0
Tamarack II Associates (3) 2,027 0
_______________
(1) Richard J. Crossed owns a 40.6% interest in Conifer Development, Inc.
(2) Formerly Conifer Realty, Inc. Richard J. Crossed owns a 40.6% interest in
C.O.F., Inc.
(3) Conifer Development, Inc. owns a 5% interest in Tamarack II Associates.
Mr. Crossed is a 2% General Partner of a partnership comprised of his
family members that owns a 39% interest in Tamarack II Associates.
In connection with the Conifer Transaction, the Company became the general
partner of St. Paul Genesee Associates, L.P. In May, 1996,Huntington Associates
L.P., a partnership in which the Operating Partnership serves as general
partner, purchased the property owned by St. Paul Genesee Associates at a
purchase price determined by the Board of Directors of the Company which was
paid in cash and by a promissory note. Mr. Crossed and Mr. August are partners
of St. Paul Genesee Associates and received or have an interest in $75,580 and
$18,965, respectively, of the cash and payments on the promissory note received
by St. Paul Genesee Associates. They abstained from the action of the Board
setting the purchase price for the property. It
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is anticipated that the
limited partnership interests in Huntington Associates L.P. will be sold in a
tax credit transaction and that substantially all of the Company's investment
will be returned.
Directors and executive officers of the Company received loans from the
Company of 50% of the purchase price of shares of Common Stock purchased by
them in connection with the Company's Executive and Director Stock Purchase and
Loan Program described above and commercial bank loans for the balance,
guaranteed by the Company. The indebtedness to the Company of each of the
named executive officers is: each of Messrs. Leenhouts and Crossed - $290,408
and Mrs. Tait - $206,000.
Home Leasing, in consideration of a portion of the Units and cash received
by it in connection with the formation of the Company, assigned to HP
Management certain management contracts between it and certain entities of
which it is a general partner. As a general partner of those entities, Home
Leasing Corporation (and, indirectly, Norman and Nelson Leenhouts) has an
ongoing interest in such management contracts. Pursuant to the Contribution
Agreement, Conifer assigned to the Company and its affiliates certain
management contracts between Conifer and entities in which it is the general
partner. As a general partner, Conifer (and indirectly, Richard Crossed) has
an ongoing interest in such management contracts.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed the accounting firm of Coopers & Lybrand LLP to serve as independent
auditors of the Company for the fiscal year ending December 31, 1997. Coopers
& Lybrand LLP has served as the Company's independent auditors since its
commencement of operations and is considered by the management of the Company
to be well qualified. A representative of Coopers & Lybrand LLP will be
present at the Annual Meeting, will be given the opportunity to make a
statement if he so desires and will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
APPOINTMENT OF COOPERS & LYBRAND LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR
THE 1997 FISCAL YEAR.
PROPOSAL 3
APPROVAL OF AMENDMENTS TO THE COMPANY'S
STOCK BENEFIT PLAN
TO INCREASE THE NUMBER OF SHARES ISSUABLE
THEREUNDER TO INDEPENDENT DIRECTORS BY 100,000 SHARES,
AND
MAKE ADDITIONAL CHANGES
The Board of Directors of the Company has approved an amendment to the
Company's Stock Benefit Plan to increase the number of shares issuable
thereunder to non-employee directors by 100,000 and to make additional changes
in light of changes in Rule 16b-3 promulgated by the Securities and Exchange
Commission. The Stock Benefit Plan requires shareholder approval for such
amendments and the rules of the New York Stock Exchange require shareholder
approval for stock option or similar plans pursuant to which stock may be
acquired by officers and directors.
Subject to stockholder approval of the changes to the Stock Benefit Plan,
the Board has approved additional awards to each director of options to
purchase 3,500 shares of Common Stock immediately following the annual
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meeting of stockholders in each of 1997, 1998 and 1999 at an exercise
price equal to the fair market value of the Company's Common Stock on
the date of grant. In addition, stockholder approval of the proposed changes
to the Stock Benefit Plan would ratify the grants of options to purchase 4,554
shares of Common Stock in August 1996 in connection with the Executive and
Director Stock Purchase and Loan Program described above. The remaining
additional options will be used from time to time to further the objectives of
the Company through the Stock Benefit Plan. No other specific option grants
have been approved at this time.
In August 1996, the Securities and Exchange Commission amended Rule 16b-3
which exempts certain transactions between a company and its officers and
directors from the short-swing trading prohibition of Section 16(b) of the
Securities Exchange Act of 1934. These proposed changes to the Stock Benefit
Plan are intended to conform the Plan to amended Rule 16b-3 and provide the
Board of Directors and the Compensation Committee with more flexibility to
administer the Stock Benefit Plan to provide incentives to key individuals
whose contributions are important to the continued success of the Company. The
proposed changes amend the provisions governing composition of the committee
administering the Stock Benefit Plan to conform with regulatory requirements
under Rule 16b-3, and other applicable requirements (for example, Section
162(m) under the Internal Revenue Code). As amended, the plan would be
administered by a committee of at least two non-employee directors who qualify
under the applicable rules. The Stock Benefit Plan would also be amended to
allow the Board of Directors to amend the Plan from time to time unless
shareholder approval was required, in the determination of the Board of
Directors of the Company, in order to preserve the intended benefits of the
Stock Benefit Plan to the Company and the participants under applicable laws,
rules or regulations of any governmental authorities, stock exchange or other
body.
The Stock Benefit Plan is described in more detail above. Copies of the
Stock Benefit Plan and the proposed amended and restated text of the Stock
Benefit Plan incorporating the changes described above may be obtained from the
Secretary of the Company.
The affirmative vote of a majority of the shares of Common Stock represented
at the Annual Meeting in person or by proxy is required for the approval of the
proposed amendments to the Stock Benefit Plan.
provided that the total vote cast on the proposal represents over 50% of all
votes entitled to be cast.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND THE
COMPANY'S STOCK BENEFIT PLAN TO INCREASE THE NUMBER OF SHARES ISSUABLE
THEREUNDER TO DIRECTORS BY 100,000 SHARES AND TO MAKE OTHER CHANGES DESCRIBED
ABOVE.
PROPOSAL 4
APPROVAL OF THE ISSUANCE OF UP TO 5,000,000 SHARES OF THE
COMPANY'S COMMON STOCK FROM TIME TO TIME IN ONE OR MORE
PRIVATELY NEGOTIATED TRANSACTIONS OR PUBLIC OFFERINGS
The Board of Directors of the Company has approved the issuance of up to
5,000,000 shares of Common Stock in one or more private placements or public
offerings upon such terms and conditions as may be approved from time to time
by the Board of Directors. New York Stock Exchange rules require than when
more than 20% of the number of shares outstanding are to be issued in a private
placement or series of related transactions, shareholder approval of the
issuance is required prior to listing such shares on the Exchange. The Company
has sufficient authorized and unissued shares for these purposes under its
articles of incorporation and if the proposal is not approved by a sufficient
vote of stockholders, the Company may limit the number of shares which it
issues and seeks to list on the Exchange to a number which falls below the
Exchange's threshold.
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At the 1995 Annual Meeting, shareholders approved the issuance of up to
2,630,000 shares of Common Stock in one or more privately negotiated
transactions or public offerings. The Class A limited partnership interest
issued by the Operating Partnership to the State Treasurer of the State of
Michigan for $35,000,000 is exchangeable for 1,666,667 shares of the Company's
Common Stock at the option of the holder. That exchange
alone would use more than half of the existing authorization. The Company has
sold or expects to sell substantially all of the remaining shares in privately
negotiated transactions at prices close to the market price. The Company
believes these sales allow it to raise equity economically and quickly when the
opportunity arises.
The Company has no current arrangements for the sale of the additional
shares of Common Stock for which approval is sought in Proposal 4, but
management believes that it may have the opportunity during the next year to
sell shares to one or more investors in one or a series of privately negotiated
transactions or in a combination of privately negotiated transactions and
public offerings or to issue units in the Operating Partnership for cash or in
exchange for one or more multifamily properties which will be convertible at
the option of the holder or the Company. The shares might be sold through
underwriters or dealers, directly to one or more investors, or through agents.
In order to provide investors with flexibility and avoid price discounts for
lack of marketability, the Company desires to register and list on the Exchange
any additional shares that it issues.
The net proceeds of any sale of shares of Common Stock for cash would be
added to the Company's general funds to be used for general corporate purposes,
including financing of possible future acquisitions of multifamily properties,
capital expenditures, working capital, or repayment of short and long-term
indebtedness. Funds not required immediately would be invested in short term
marketable securities. The Company cannot predict the price at which such
shares may be priced in connection with the issuance of Operating Partnership
units for multifamily properties or the price at which shares issued for cash
may be sold, but in each case the terms of the issuance would be approved by
the Board of Directors of the Company prior to the issuance.
The affirmative vote of a majority of the shares of Common Stock represented
at the Annual Meeting in person or by proxy is required for the approval of the
proposed issuance of additional shares of Common Stock provided that the total
vote cast on the proposal represents over 50% of all votes entitled to be cast.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE
ISSUANCE OF UP TO 5,000,000 SHARES OF THE COMPANY'S COMMON STOCK FROM TIME TO
TIME IN ONE OR MORE PRIVATELY NEGOTIATED TRANSACTIONS OR PUBLIC OFFERINGS.
OTHER MATTERS
SOLICITATION OF PROXIES
The cost of solicitation of proxies in the form enclosed herewith will be
paid by the Company. In addition to the solicitation of proxies by mail, the
directors, officers and employees of the Company may also solicit proxies
personally or by telephone without additional compensation for such activities.
The Company will also request persons, firms and corporations holding shares in
their names or in the names of their nominees, which are beneficially owned by
others, to send proxy materials to and obtain proxies from such beneficial
owners. The Company will reimburse such holders for their reasonable expenses.
STOCKHOLDER PROPOSALS
A stockholder proposal submitted pursuant to Rule 14a-8 under the Securities
Exchange Act of 1934, as amended, for inclusion in the Company's proxy
statement and form of proxy for the 1998 annual meeting of
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stockholders must be
received by the Company by November 26, 1997. Such a proposal must comply with
the requirements as to form and substance established by the Securities and
Exchange Commission for such a proposal to be included in the proxy statement
and form of proxy, and the proponent or a representative of the proponent must
attend the Annual Meeting.
INCORPORATION BY REFERENCE
The Company's financial statements for the years ended December 31,1996 and
1995, the supplemental financial information and management's discussion and
analysis of financial condition and results of operations contained in the
Company's Annual Report on Form 10-K (File No. 1-13136) filed with the
Securities and Exchange Commission are incorporated herein by reference.
Copies may be obtained from Rebecca Fountain, Home Properties of New York, Inc.
850 Clinton Square, Rochester, New York 14604 or from the Securities and
Exchange Commission over the Internet at its Web site (http:\\www.sec.gov).
OTHER MATTERS
The Board of Directors does not know of any matters other than those
described in this Proxy Statement which will be presented for action at the
Annual Meeting. If other matters are presented, proxies will be voted in
accordance with the best judgment of the proxy holders.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO THE
COMPANY. PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY
CARD TODAY.
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PRELIMINARY PROXY
HOME PROPERTIES OF NEW YORK, INC.
REVOCABLE PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS MAY 6, 1997
The undersigned hereby appoints Norman P. Leenhouts and Nelson B.
Leenhouts, or each of them, as Proxies with full power of substitution to
represent the undersigned and to vote all Common Stock of Home Properties of
New York, Inc. which the undersigned would be entitled to vote at the 1997
Annual Meeting of Stockholders of the Company to be held on May 6, 1997 and any
adjournment thereof.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
____________________________________________________________________________
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR":
PROPOSAL ONE - To elect the following persons as
directors to serve until the next annual meeting
of stockholders and until their successors have
been elected and have qualified: Norman P.
Leenhouts, Nelson B. Leenhouts, Richard J.
Crossed, Amy L. Tait, Burton S. August, Sr.,
William Balderston, III, Alan L. Gosule,
Leonard F. Helbig, III, Roger W. Kober,
Clifford W. Smith, Jr. and Paul L. Smith.
FOR all nominees WITHHOLD AUTHORITY
listed (except as to vote for all nominees
marked to the listed / /
contrary) / /
(Instruction: To withhold authority to vote for
any individual nominee, write that nominee's
name on the space provided below.)
________________________________________________
PROPOSAL TWO - To ratify the appointment of
Coopers & Lybrand, LLP as independent auditors
for 1997.
For / / Against / / Abstain / /
PROPOSAL THREE - To approve certain amendments
to the Company's Stock Benefit Plan, including
increasing the number of authorized shares of
Common Stock for options to independent
directors.
For / / Against / / Abstain / /
PROPOSAL FOUR - To approve, pursuant to the
rules of the New York Stock Exchange, the
issuance of up to 5,000,000 shares of the
Company's Common Stock from time to time in one
or more privately negotiated transactions or
public offerings.
For / / Against / / Abstain / /
This proxy, when properly executed, will be
voted in the manner directed hereon. If no
direction is made, it will be voted "FOR"
proposals 1, 2, 3 and 4. In their discretion,
the Proxies are authorized to vote upon such
other business as may properly come before the
meeting or any adjournment thereof, including
the election of a person designated by the Board
of Directors as a director in the place of a
nominee who is unable to serve.
Mark here for address change / /
Please mark, sign, date and return this proxy
card using the enclosed envelope.
Dated: ____________ , 1997
Signature:__________________________________________
Signature:__________________________________________
(Please sign as name appears at left. Joint
owners should each sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give full title as such.)